ADB back to drawing board as slump hits poor

By STEPHEN WRIGHT, The Associated Press
| 1:36 a.m.May 1, 2009

Filipino women activists hold slogans in front of the Asian Development Bank headquarters in suburban Manila, Philippines on Wednesday, April 29, 2009. The demonstrators alleged that ADB's policies and programs that are supported by various Asia Pacific governments have contributed to the increasing poverty and worsening quality of life of people in the region. (AP Photo/Aaron Favila)
— AP

Filipino women activists hold slogans in front of the Asian Development Bank headquarters in suburban Manila, Philippines on Wednesday, April 29, 2009. The demonstrators alleged that ADB's policies and programs that are supported by various Asia Pacific governments have contributed to the increasing poverty and worsening quality of life of people in the region. (AP Photo/Aaron Favila)
/ AP

DENPASAR, Indonesia 
Just two years ago, the Asian Development Bank was struggling with an identity crisis of sorts as a wave of new prosperity called into question its basic mission: lifting millions out of extreme poverty.

Now, as Asia sputters amid the global slowdown, the problem facing much of the region is no longer ensuring the fruits of rising affluence are spread evenly – but eking out any growth at all.

Armed with a much bigger war chest, the ADB – which starts its annual meeting in Bali, Indonesia, on Saturday – is renewing its pledge to fight poverty and preparing to take a bigger role in the region.

That might seem good news for Asia, but it's not universally welcomed. Some critics say its financing would be better left to the private sector while activists fault ADB-funded projects for harming the very people they aim to help.

On Thursday, the bank's 67 member countries approved a tripling of the ADB's capital to $165 billion, expanding the lender's ability to fight the global economic crisis and finance infrastructure and other projects in partnership with the private sector.

"We must do all we can to prevent the reversal of hard-won gains for our region in social and economic development, and in poverty reduction," ADB President Haruhiko Kuroda said in a statement.

On the sidelines of the meeting, the Association of Southeast Asian Nations along with China, Japan and South Korea are likely to approve enlarging an emergency currency pool to $120 billion – and make the funds easier to access in a crisis.

Also on the agenda of the May 2-5 gathering: combating climate change and reducing Asia's reliance on exports for growth.

The meeting venue, an international convention center nestled amid plush five-star resorts, will provide a stark contrast to one of the main talking points: tackling Asia's endemic poverty. More than 900 million live on $1.25 or less a day.

The global recession sparked by overweening greed on Wall Street threatens to keep nearly 160 million Asians trapped in extreme poverty, a setback for ambitious goals such as 90 percent of the region's people reaching "middle income" status by 2020.

The Manila-based ABD has also come under fire. A Wall Street Journal editorial said the bank, established in 1966 to fight poverty, "needs a rethink more than it needs cash."

The two biggest recipients of ADB loans – India and China – are probably the least in need of subsidized credit after soaking up billions of foreign investment capital in recent years, the paper said. Nor are they Asia's poorest nations, it said.

Another thorny issue is how the bank's 44 developing nation members can reverse environmental woes unleashed by breakneck growth that the bank helped spur with its loans.

Also, some question whether ADB projects cause more harm to local communities than good. Last year, the ADB pulled out of a coal-fired power plant project in Pilburi, Bangladesh, that activists warned would displace 43,000 people.

With the region's growth likely to almost halve to 3.4 percent this year from 2008, the ADB estimates some 61 million people will be prevented from rising out of extreme poverty. That figure will rise to nearly 160 million if slow growth continues next year, it says.

"This crisis also affects people who are just above the poverty line, people who have only just escaped extreme poverty," said Gyorgy Sziraczki, senior economist at the International Labor Organization.

Some 190 million people get by on incomes that are just 20 percent – just a few cents – above the $1.25-a-day extreme poverty line.

The ILO estimates 23 million of the working poor will lose jobs this year, potentially leading to a social crisis that could take longer to shake off than the economic downturn.

For activist non-governmental organizations, such figures only add to the urgency of reforming the ADB.

The bank's policies for ensuring its projects do good "are more favorable to the private sector" than ordinary people, said Enrico Aditjondro, a spokesman for the NGO Forum on the ADB – an umbrella group pushing the bank to become more accountable.